THE MARKETING MANAGEMENT PROCESS

Marketing Strategy

A strategy is a fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors.

Rather than a single comprehensive strategy, many organizations have a hierarchy of interrelated strategies, each formulated at a different level of the firm three major levels of strategy in most large, multi-product organizations are:

Ø Corporate strategy
Ø Business-level strategy
Ø Functional strategies, e.g. marketing strategy

(refer to Page 5, Table 1.2 for the Different planning levels in the company)

Mission
A firm’s mission is the senior management’s view of what the organizational seeks to do and become over the long term. E.g. McDonald’s combine their mission with a vision statement:

Our vision is to be world’s best ‘quick service restaurant’. This means opening running great restaurants and providing exceptional quality, service, cleanliness and value.

Source: www.mcdonalds.com.

Objectives
Objectives in the hierarchical definition of strategy are the specific performance targets that firms aspire to in each of the areas included in a firm’s mission statement.

Marketing plan
To be most effective, a plan must be formalized usually in written form, as an identifiable marketing plan. The process of marketing management and the development of a marketing plan is no different from any other functional areas of management in that it essentially comprises four key tasks.



Analysis
The starting point of marketing management decisions is analysis. Customers, competitors, trends and changes in the environment, and internal strengths and weaknesses must each be fully understood by the marketer before effective marketing plans can be established. Analysis in turn, requires information using systematic market research and marketing information systems.

Planning
The second task of the manager is the planning process. The marketing manager must plan both long-term marketing directions for the organization (strategic planning), including, e.g. the selection of target markets, and the marketing programmes and tactics that will be used to support these strategic plans.

Implementation
Both strategic and tactical plans must be acted upon if they are to have any effect. The implantation tasks of marketing management involve such activities as staffing, allocating task and responsibilities, budgeting, and securing any financial and other resources need to carry out the plans. Actions include activities, like placing an advert in the right media, delivering products, doing customer surveys.

Control
The fourth task is measuring and evaluating progress against objectives and targets established in plans.

Strengths of the hierarchical approach to marketing planning
The hierarchical approach has three important strengths. They are:
v It emphasizes the link between strategy and performance
v This hierarchical definition focuses on the multiple levels of analysis that are important in formulating and implementing strategies.
v This hierarchical definition emphasizes that strategy in order to have an impact on performance, cannot remain simply an idea in an organization.


Weaknesses of the hierarchical approach to marketing planning
The most important weaknesses of the hierarchical approach are as follows:
q Has a very underdeveloped notion of the external competitive environment’s impact on strategy formulation and implementation.
q It tends to focus, almost exclusively, on formal, routine, bureaucratic strategy-making processes.
q Despite their apparent rigor (firmness) and clarity, they often fail to give significant guidance to managers when they are applied in real organizations.





The traditional (transactional) marketing (TM) concept versus the relationship marketing (RM) concept
The American Marketing Association (AMA), an international organization of practitioners and academicians, defines marketing as follows:

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Traditional (transactional) marketing concept is:
Ø The conception, pricing, promotion and distribution of ideas, goods and services.
Ø Independence of choice among marketing players creates a more efficient system for creating and distributing marketing value.

The model of transaction marketing (as in the 4Ps) rests on three assumptions:
Ø There is a large number of potential customers
Ø The customers and their needs are fairly homogeneous
Ø It is rather easy to replace lost customers with new customers

The relationship marketing (RM) concept
According to Gordon (1998), p.9,
Relationship marketing is the ongoing process of identifying and creating new value with individual customers and then sharing the benefits from this over a lifetime of association. It involves the understanding, focusing, and management of ongoing collaboration between suppliers and selected customers for mutual value creation and sharing through interdependence and organizational alignment.

RM not only attempts to involve and integrate suppliers and customers. Besides a need for focusing on customer retention, Payne (1995) emphasizes that RM indicates a shift towards the organization of marketing activities around cross-functional functions. Payne (1995) presents six markets that need to be considered if the customer is to be served satisfactorily. They are:
1. Customer markets – (Customer retention, customer lifetime value).
2. Internal markets – Internal marketing: every employee is an internal customer or an internal supplier.
3. Supplier markets – collaboration with key suppliers.
4. Referral markets – Creation of advocates (besides customers): intermediaries, agencies.
5. Recruitment markets – Human resources/skilled people.
6. Influence markets – Industry related influencers: associations, governments departments (universities).

Please see Table 1.3 for the important differences between the two marketing orientations of transactional and relationship marketing.



How the RM concept influences the traditional marketing concept
Some of the consequences of a relationship orientation for the traditional four marketing parameters (4Ps) are given:

Product
RM, when appropriately implemented, results in products being cooperatively designed, developed, tested, piloted, provided, installed, and refined. RM involves real-time interaction between the company and its priority customers as the company seeks to move more rapidly to meet customer requirements.

Price
Relationship oriented pricing is centered on the application of price differentiation strategies. The pricing should correspond to customer lifetime values.

Distribution
The general message of RM for distribution is that it should get closer to the customer. RM considers distribution from the perspective of the customer, who decides where, how, and when to buy the combination of products and services that constitute the vendor’s total offering. Seen this way, distribution is not a channel but a process.

Communication (promotion)
RM gives individual customers an opportunity to decide how they wish to communicate with the enterprise, how often, and with whom. The RM approach indicates the need for integrated communication and the demand for interactive communication.

Different organizational forms of RM
RM can be categorized into three forms of organization:
1. Dyadic relationships – a dyadic buyer-seller relationship that tends to ignore the role of other elements in the distribution channel and the role of other stakeholders.
2. Chain of relationships – although the unit of analysis is still dyadic, the dyad can be other than one buyer-seller relationship.
3. Networks – a more complex structure of relationships or networks involving three or more parties.